Correlation Between IShares Financials and IShares Industrials
Can any of the company-specific risk be diversified away by investing in both IShares Financials and IShares Industrials at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares Financials and IShares Industrials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Financials ETF and iShares Industrials ETF, you can compare the effects of market volatilities on IShares Financials and IShares Industrials and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares Financials with a short position of IShares Industrials. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Financials and IShares Industrials.
Diversification Opportunities for IShares Financials and IShares Industrials
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Financials ETF and iShares Industrials ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Industrials ETF and IShares Financials is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares Financials ETF are associated (or correlated) with IShares Industrials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Industrials ETF has no effect on the direction of IShares Financials i.e., IShares Financials and IShares Industrials go up and down completely randomly.
Pair Corralation between IShares Financials and IShares Industrials
Considering the 90-day investment horizon iShares Financials ETF is expected to generate 1.14 times more return on investment than IShares Industrials. However, IShares Financials is 1.14 times more volatile than iShares Industrials ETF. It trades about 0.17 of its potential returns per unit of risk. iShares Industrials ETF is currently generating about 0.14 per unit of risk. If you would invest 8,027 in iShares Financials ETF on August 27, 2024 and sell it today you would earn a total of 3,746 from holding iShares Financials ETF or generate 46.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Financials ETF vs. iShares Industrials ETF
Performance |
| Timeline |
| iShares Financials ETF |
| iShares Industrials ETF |
IShares Financials and IShares Industrials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Financials and IShares Industrials
The main advantage of trading using opposite IShares Financials and IShares Industrials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Financials position performs unexpectedly, IShares Industrials can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IShares Industrials will offset losses from the drop in IShares Industrials' long position.| IShares Financials vs. UBS AG London | IShares Financials vs. UBS AG London | IShares Financials vs. ETRACS Quarterly Pay | IShares Financials vs. ETRACS 2xMonthly Pay |
| IShares Industrials vs. iShares Consumer Discretionary | IShares Industrials vs. iShares Consumer Staples | IShares Industrials vs. iShares Basic Materials | IShares Industrials vs. iShares Utilities ETF |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |